Looking for ways to save for retirement in addition to your Hewlett Packard Enterprise 401(k) Plan? An Individual Retirement Account (IRA) may be something to consider.
Some financial experts estimate that you may need up to 85% of your pre-retirement income in retirement to maintain your current standard of living. If you feel the need to supplement your current 401(k) savings to help reach this goal, you may be able to contribute to both a 401(k) and an IRA.
What is an IRA?
An IRA is a tax-advantaged account designed to help you save for retirement. There are two types of IRAs to choose from: Roth IRAs and Traditional IRAs, each with different advantages. The tax benefits associated with either type of IRA may allow your savings to grow more quickly than in a taxable brokerage account with the same investment options.
Roth IRA vs. a Traditional IRA—What’s the difference?
If you’re interested in opening an IRA, you’ll need to decide between a Roth and Traditional IRA, which primarily differ on whether you want to pay taxes now or when you retire. The table below can help you navigate your choice.
| Roth IRA | Traditional IRA | |
|---|---|---|
| How do they work? | You contribute after-tax dollars to a Roth IRA. Any earnings grow without being subject to federal tax (because you’ve already contributed post-tax money), and qualifying distributions are made tax free. | A Traditional IRA may allow you to deduct contributions on your income taxes now and pay the taxes when you make qualified withdrawals in retirement. |
| What are the federal tax advantages? | Tax-free growth. You pay no taxes on investment earnings as long as you meet the IRS withdrawal requirements (see below). | Tax-deferred growth. You pay no taxes on investment earnings or deductible contributions until you withdraw them. |
| Who’s eligible? | You can contribute at any age provided you have earned income equal to or greater than your contribution. | You can contribute if you’re under age 70 ½ at the end of the tax year, provided you have earned income equal to or greater than your contribution. |
| What are the 2026 income limits for making a contribution? | To open and contribute to a Roth IRA, your 2026 income cannot exceed a limit set by the IRS. Review the 2026 limits here. | There is no maximum income restriction for contributing to a Traditional IRA; however, your ability to deduct the contributions from your income for tax purposes may be reduced at higher income levels. Talk to a tax advisor for details. |
| What is the maximum annual contribution? | A total annual contribution limit applies to both your Roth and Traditional IRA contributions. For 2026, the total IRA contribution limit is $7,000 or 100% of your taxable compensation for the year, whichever is less, per person, per tax year. If you are age 50 or older (in the calendar year of your contribution) you can contribute an additional $1,000 as a catch-up contribution. | |
| When can I make a withdrawal? |
|
Note: You can make penalty-free withdrawals before age 59 ½ for qualified education expenses, a qualified first-time home purchase, unreimbursed medical expenses, health insurance (if you’re unemployed), or a disability. |
| Is there a mandatory withdrawal age? | No. | Yes. Distributions must start at age 70 ½. |
What is a Roth IRA conversion?
Converting to a Roth IRA means that you turn a Traditional IRA into a Roth IRA by paying taxes on the amount you convert in the year of conversion. Once you’ve converted the Traditional IRA (or a portion of the IRA) to a Roth IRA, any growth in your account will be federal tax-free—and your withdrawals in retirement will also be federal tax-free.
The decision to convert needs to be made with care and should include a full consultation with your tax advisor. Generally, it may make sense to convert to a Roth IRA if you:
- Expect higher taxes in the future, because you may pay lower taxes now than if you waited until retirement to begin taking taxable withdrawals.
- Have a long investment time frame, because of the greater opportunity to benefit from tax-free growth over a longer time period.
- Can pay the taxes on the conversion, because those taxes can be substantial.
Where can I learn more about IRAs?
The best place to start is with a financial planner or tax advisor who can help you decide which option is right for you. Discuss your personal financial situation and get help working toward your savings goals by calling The Hewlett Packard Enterprise Benefits Service Center at Fidelity at 1-800-409-4015 from 7:30 a.m. to 11:00 p.m. CT.
In addition, IRS Publication 590 offers information about IRAs and details on regulations about how they can be set up.
Keep building your nest egg
Clearly, many factors determine what might be the best way for you to save for retirement—from what you can afford to save to your risk tolerance and tax situation. Although the Hewlett Packard Enterprise 401(k) Plan is one of the best ways to save for retirement, contributing to an IRA over time can also be a powerful tool to help you save for retirement. If you contribute every year to an IRA—even if you start at age 40—your money has the potential to grow considerably depending on the performance of your IRA’s underlying investments. It’s something to consider if you want to maximize the value of the money you earn today and save for a healthy retirement.
*For more details about the difference between a Roth 401(k) contribution and a traditional 401(k) contribution, read Roth 401(k) and traditional 401(k) contributions—the choice is yours.
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Looking for more retirement savings?
An IRA can complement your HPE 401(k) and provide additional tax-advantage opportunities to help your future savings.
